Oklahoma State University
23 February 2016
When I was coming up with my research question I knew that I should pick something that interests me. I came to my final research question because the stock market is something that I am interested in but I don’t know a lot about how it works. The stock market has interested me since I understood the concept of it about 4 years ago. From then on I wanted to understand the stock market better and the things that cause the stock market to change.
In the articles I have found for my research topic, I have found that a lot of environmental factors have a big impact on the stock market, things such as the weather and natural disasters. Researching these articles has given me a better understanding of the stock market and has helped me see what causes the fluctuations in the stock market.
Alsalman, Zeina, and Ana María Herrera. “Oil Price Shocks And The U.S. Stock Market: Do Sign And Size Matter?.” Energy Journal 36.3 (2015): 171-188. Academic Search Premier. Web. 16 Feb. 2016.
In Oil Price Shocks and the U.S. Stock Market: Do Sign and Size Matter by Zeina Alsalman and Ana Maria Herrera, they are trying to see if the oil prices have an effect on the stock market. The intended audience for this article is people who want to learn more about what causes the changes in the stock market. Every time the stock market is declining, there seems to be a direct correlation to the price of oil. When the cost of oil starts to increase, the stock market always seems to decrease. Since there are many accounts of oil prices having a negative affect on the stock market, it seems like the price of oil would have to have a direct impact on the stock market, but there are several accounts of oil prices having no correlation to the stock market. This is one of the accounts of the oil prices having no affect on the stock market “Similarly, Wei encountered that the oil price shock of 1973-74 had no impact on stock returns” this quote is telling people that the oil prices are not always to blame for the declining stock market. It has also been said that the oil prices can help the stock market “Chen, Roll and Ross and Huang, Masulis and Stoll found no evidence of a negative relationship between prices of oil futures and stock returns.” Even though there are a lot of accounts of the oil prices having a negative affect on the stock market, it doesn’t mean that the oil prices are always going to have a negative affect on the stock market.
Ferreira, Susana, and Berna Karali. “Do Earthquakes Shake Stock Markets?.” Plos ONE 10.7 (2015): 1-19. Academic Search Premier. Web. 18 Feb. 2016.
In the article titled, Do Earthquakes Shake Stock Markets, authors Susana Ferreira and Berna Karali are trying to see if earthquakes have an effect on the stock market. They say that earthquakes in particular do not affect the stock market, but the damage other natural disasters have on the economy do. In the first sentence of the Introduction paragraph it says that “Over the past few decades the world has witnessed an increase in the reported frequency and damages caused by natural disasters, particularly hydro-meteorological disasters.” This quote is saying that the biggest natural disaster that affect the stock market is due to water related incidents. Even though it seems like natural disasters in general would have an affect on an economies stock, it really depends on the type of natural disaster, to have an effect on an economies stock. For instance, a flash flood would not play a very big role in affecting the stock market. However, if a developing country had a very impactful natural disaster such as a tsunami, the effects the natural disaster has on the stock market might even be greater than in developed country’s. In one study Fomby et al. says that “it is very important to account for disaster type. In their study, droughts have a negative impact on GDP growth, whereas moderate floods have a positive impact and earthquakes have no effect.” This being said, natural disasters are not always detrimental to the stock market, they can even help depending on the magnitude of the natural disaster.
Arditi, Eli, Eldad Yechiam, and Gal Zahavi. “Association Between Stock Market Gains And Losses And Google Searches.” Plos ONE 10.10 (2015): 1-12. Academic Search Premier. Web. 20 Feb. 2016.
In Association between Stock Market Gains and Losses and Google Searches by Eli Arditi, Eldad Yechiam, and Gal Zahavi, the authors are trying to find out if there is a correlation between the Stock Market and Google searches. In their studies of the correlation between the Stock Market and Google searches, they found that “analyzing data collected by major search engines such as Google may shed light on relations between real-world events and people’s information search behavior.” They have found that there seems to be an increase in the volume of search terms when things are going wrong. In the article this can be understood by the quote “For instance, previous studies have shown that search-term volumes were correlated with events such as surges of unemployment  and reports of flu infections . Likewise, query volumes of company names were found to be correlated with their stock-market trading volumes [3,4] and volatility .” On the flip side, the researchers are able to tell when the Stock Market is doing good because there is a decrease in the amount of searches in search engines such as Google. Some studies have also found that searches in Google can have a direct affect on the Stock Market. “For instance, a relative increase in search of the word ‘debt’ tended to precede stock market decline.” This concludes that most of the time people can find factors of the economy that influence other parts of the economy. It also tells us that it is very important to pay attention to the key words that are put into search engines.
Chang, Tsangyao, et al. “Are Stock Market Returns Related To The Weather Effects? Empirical Evidence From Taiwan.” Physica A 364.(2006): 343-354. Academic Search Premier. Web. 21 Feb. 2016.
In Are stock market returns related to the weather effects? Empirical evidence from Taiwan by Tsangyao Chang, Chien-Chung Nieh, Ming Jing Yang, and Tse-Yu Yang, the authors are collecting evidence to see if the stock market is related to weather effects. In the article the authors do say that weather has an affect on people’s mood. For instance a sunny day usually puts people in a good mood , and a cloudy day usually puts people in a bad mood. Based on the information that these people have collected, one can assume that weather does have an affect on the stock market because the weather influences peoples mood and the people operate the stock market. The researches state that “people in a good mood typically tend to make more optimistic decisions”, this quote is saying that when people are in a good mood they tend to make better decisions than if they were in a bad mood. The article also states “ that the NYSE index returns tended to be negative on cloudy days” proving that there is a correlation between the stock market and the effects of the weather. If people could choose between having a sunny day versus having a cloudy day, odds are that more people are going to choose to have a sunny day because it makes people feel good when they are able to see everything in good light. When there is a cloudy day there a difference in the way the day makes people feel, and usually causes people to make mistakes.
Stošić, Dusan, et al. “Multifractal Properties Of Price Change And Volume Change Of Stock Market Indices.” Physica A 428.(2015): 46-51. Academic Search Premier. Web. 23 Feb. 2016.
In Multifractal properties of price change and volume change of stock market indices by Dusan Stosic, Darko Stoisc, Tatijana Stosic, and Eugene Stanley, the authors are trying to determine if the trading volume in the stock market affects the price in the stock market. The trading volume in the stock market is the amount of a security that is traded during a given period of time and the price is just the price of the stock. In the article, they have concluded that “a small volume is usually accompanied by a fall in price, and a large increase in volume is usually accompanied by a large rise or fall in price”, this quote is saying that a decrease in the number of shares is followed by a fall in price and an increase in the number of shares is not as predictable as a decrease in the number of shares because it can rise in price or fall in price. Once someone begins to grasp the concept of what is being conducted in this study, it becomes very apparent that a decrease in the number of shares from the previous day would be because of a decrease in the price of a single share. It almost seems like it would be redundant for the authors to say something like that, but they say it in the article to tell people that the price of an individual share is going to have a direct affect on the volume of the share.